Hostess Says It Will Liquidate If Strikers Don’t Return
Hostess Brands Inc., the maker of Wonder bread and Twinkies, said it will shut down and liquidate unless enough members of its striking bakery workers’ union return to work today to resume normal operations.
The Bakery, Confectionery, Tobacco Workers and Grain Millers International Union went on strike Nov. 9 after a bankruptcy judge in White Plains, New York, imposed contract concessions that 92 percent of the union’s workers rejected.
“We don’t have the financial wherewithal, nor the manpower, to sustain operations through a strike,” Chief Executive Officer Gregory Rayburn said today in an interview with Betty Liu on ‘In The Loop’ on Bloomberg Television.
The bakery union president issued a statement repeating earlier demands.
“I am sure that our members would be agreeable to return to work as soon as the company rescinds the implementation of the horrendous wage and benefit reductions, including pension, and the restoration of the cuts that have already taken place,” Union President Frank Hurt said.
Hostess closed three of its 36 plants permanently Nov. 12, blaming the strike. About 13 plants are operating “unsustainably” because of worker shortages, Hostess’s Rayburn said. The bakers’ union has “made no demands, and in fact they stopped returning our calls about a month ago,” he said.
Nov. 20 Shutdown
Rayburn said yesterday Hostess will file court papers tomorrow asking for authorization to shut the company down entirely on Nov. 20. It will ask the judge to hold a liquidation hearing Nov. 19, he said.
The International Brotherhood of Teamsters said today in a statement that the bakery union’s members should decide whether to return to work.
“A vote of its Hostess members by secret ballot should be held to determine if the workers want to continue their strike of the company and force it into liquidation,” the Teamsters said in the statement, posted on the union website.
Bakery union leaders are “putting Teamster members in a horrible position -- asking them to support a strike that will put them out of a job when they haven’t even asked all their members to go on strike,” the Teamsters said.
Liquidation would mean the loss of 18,000 jobs, Rayburn said. It’s now up to the bakery workers “to decide if they want to call off the strike and save the company, or cause massive financial harm to thousands of employees and their families,” Rayburn said in a statement.
The Teamsters Union voted to accept a new contract with 8 percent in wage concessions and 17 percent in benefit reductions.
A reorganization plan filed in the court last month can’t be implemented without selling some assets or obtaining new financing. The Teamsters and the bakery workers’ union made voluntary concessions in the first Chapter 11 reorganization, which began in 2004.
Hostess, based in Irving, Texas, filed under Chapter 11 for a second time in January, listing assets of $982 million against liabilities totaling $1.43 billion.
The new case is In re Hostess Brands Inc., 12-22052, U.S. Bankruptcy Court, Southern District of New York (White Plains). The prior bankruptcy was In re Interstate Bakeries Corp., 04- 45814, U.S. Bankruptcy Court, Western District of Missouri (Kansas City).
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